Chemours plans to close its Niagara Falls plant by the end of next year, eliminating about 200 jobs at the Buffalo Avenue factory.
The decision to shut the Niagara Falls plant, which makes reactive metals for specialty chemicals industries such as pharmaceutical, pulp and paper and others, comes five months after DuPont spun off the performance chemicals company at the beginning of July. The job cuts include some contractors who work at the Niagara Falls factory, said Robin Ollis Stemple, a Chemours spokeswoman.
The company said Monday it will lay off about 5 percent of its global workforce, or about 400 people, as part of a cost-cutting program. Closing the Niagara Falls plant is expected to improve the company’s operating cash flow by about $20 million a year beginning in 2017, Chemours said. The job cuts at the Niagara Falls plant and elsewhere are expected to save the company about $50 million a year.
“We certainly didn’t expect this to happen,” said Jim Briggs, a staff representative at the United Steelworkers union, which represents workers at the plant. “I thought we’d be talking about a sale, rather than a closure.”
Briggs said he hopes Chemours officials will be willing to work with union representatives to try to find a buyer for the plant, which is the only domestic manufacturer of sodium metal and lithium.
“If Chemours is a good community-minded company, they’ll work with us to help find a buyer to continue to operate the plant,” he said.
Closing the Niagara Falls plant and its other cost-cutting moves “will allow us to focus our resources on our core business segments, operate more efficiently, and strengthen our financial position,” said Mark Vergnano, Chemours president and CEO. The company plans to focus on its titanium dioxide, refrigerant chemicals and cyanide products, he said.
The shutdown of the Niagara Falls plant, while keeping the methylamines portion of its chemical solutions business, was “the best financial option that we have in place today,” Vergnano said during an investors conference on Tuesday.
“When we looked at our chem solutions portfolio, we said that the one business we knew we wanted to keep and grow was our cyanides business,” Vergnano said. “Everything else was under review. We were looking at ‘do we fix, do we sell, or do we shut down.’ ”
The Niagara Falls factory depended heavily on low-cost electricity from the New York Power Authority. The company received 35.5 megawatts of discounted electricity from the Power Authority, equal to more than 5 percent of all of the low-cost electricity available to Western New York businesses through the agency’s expansion and replacement power programs. Without that low-cost power, the Niagara Falls plant would not have been viable, Briggs said.
Only three other Western New York manufacturers – Occidental Chemical Corp., Olin Corp. and Praxair Inc. – receive a greater amount of low-cost electricity than Chemours. If the plant closed, that power would be available to be allocated by the Power Authority to other eligible manufacturers within a 30-mile radius of the Niagara Power Project in Lewiston. Unallocated power is sold into the wholesale power market and the proceeds are used to support economic development projects under a program administered by the Power Authority.
Chemours said it expects to take a $45 million charge during the fourth quarter to pay for the cutbacks. Chemours, whose brands include Teflon, Freon and ti-Pure, has said it plans to reduce its expenses by another $350 million by 2017.
Chemours is one of the world’s biggest producers of titanium dioxide, a white pigment used in paint. But falling titanium dioxide prices over the past three years, as China has switched from being a net importer to a net exporter, have squeezed the profitability of Chemours titanium dioxide business, said David Wang, a Morningstar analyst.
The company has lost a total of $47 million during the past two quarters as sales have declined by almost 10 percent.
The shutdown of the Niagara Falls plant is part of a cost-cutting effort that already includes the closing during September of a titanium dioxide plant in Delaware and the elimination of one titanium dioxide production line at a factory in Tennessee. As part of the restructuring program, the future of the company’s cleaning and disinfecting chemicals business, as well as its sulfur products unit, are under review.
Chemours has 37 production facilities in 12 countries with 9,000 employees. It generated about $6 billion in sales last year.